ECB launches new aid package to soothe effects of pandemic

By HAL WILLIAMS

THE EUROPEAN Central Bank has launched a €750bn emergency package to buy government and company debt across the eurozone.

The temporary purchasing scheme is to “counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus”, the ECB said in a media release.

Other recent efforts by the ECB to calm markets have failed, and critics say even this latest move is misguided. “The help needs to be given at the bottom, not at the top,” one Spanish business owner, who asked not to be named, told BV. “This will benefit no one except the banks. This is supply side; the problem is on the demand side.”

The Pandemic Emergency Purchase Programme was announced by ECB president Christine Lagarde, who said the bank would do everything in its power to support the euro.

The temporary package will end when the ECB “judges that the coronavirus Covid-19 crisis phase is over” – but not before the end of the year.

Central banks and governments around the world are introducing stimulus plans. Co-ordinated action has come from the UK, Japan, Europe, Canada and Switzerland. The US Federal Reserve has cut interest rates to near-zero and launched an aid package of its own valued at $700bn (£604bn).

Former Bank of England governor Mark Carney said that the collaborative action by central banks “will improve global liquidity by lowering the price and extending the maximum term of US dollar-lending operations”.

 

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